Finnish engineering companies, Konecranes and Cargotec have signed a combination agreement and a merger plan in order to create a giant in the freight handling sector.
The Helsinski-based Cargotec, which includes the leading manufacturer Kalmar, and the Hyvinkää-based maritime equipment firm Konecranes entered into the agreement on 1 October, following which they are committed to combining their business operations.
This merger, which is expected to go through in 2022, is a pivotal step for the Finnish industry, as the Scandinavian country will have a global top player in various fields, such as port equipment manufacturing and cargo and material handling. The future company’s illustrative combined annual sales are approximately US$8.2 billion and comparable operating profit approximately US$662 million based on the fiscal year 2019. At the same time, the new company will possess a global staff of 29,400 employees across over 50 countries.
The proposed combination will be implemented as a statutory absorption merger whereby Konecranes will be merged into Cargotec, according to a statement, while Cargotec will issue new shares to seal the 50%-50% coalition.
The board of directors of the new company will include four directors from the two current boards of the companies and will be conducted by the proposed chairman Christoph Vitzthum, who is currently the head of Konecranes. The first chief executive officer and president of the new merging company has not been decided yet.
The combination agreement is expected to face scrutiny from regulator and shareholder bodies, whose approval is necessary for the proceeding of the merging processes.
